Trade Example: Trading Daily Sentiment Shifts In The AUD/USD

"We could use this most recent resistance zone as a good spot to take profit on any moves to the upside."
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We’re going to demonstrate how Forex Source subscribers made money trading a sentiment shift involving Risk Sentiment & Fed Policy Actions this week…

The move we’re going to be looking at is this one here on AUDUSD. So, let’s break this down and see how you could have predicted and caught this move, using our market commentary.

So, firstly we need to understand the context or the baseline surrounding this pair before the move took place…

Inside the Forex Source Terminal, in our market insights tab, we released our dominant currency sentiment report we saw that the Aussie Dollar was supported by an overall positive risk tone as the market reacted positively towards the Fed’s announcement of an unlimited QE program.

On the other end of the scale, the USD was leading the pack to the downside as the Dollar was pressured following the Fed’s open-ended QE announcement. Thus, as long as the risk tone remained positive, we expected the AUD to gain on the USD and see upside for the AUDUSD currency pair.

Once the baseline was in place the next step is to identify the type of breaking news that would generate the biggest market moving shift…

Also in terminal on the 24th of March inside our video commentary section, we released our daily open videos for all the major pairs and explained that a further ease of market concerns about the Coronavirus would see further risk on flows that would support the AUDUSD to the upside.

So now all we needed next was the trigger, in other words, the sentiment shift that we identified ahead of time, to actually take place.

During the 24th we saw a sharp pullback in all the high-beta commodity-based currencies like the AUD, and we made a quick video update highlighting that there was no clear catalyst for the move downwards and that meant that the move lower could be used as the ideal opportunity to buy the AUDUSD at a better level like the one we had marked out on the chart in our prior videos for that day.

So in the chart, we can see that this overall level of support is where we highlighted as a good spot to consider re-engaging the pair to the upside, and that we could use this most recent resistance zone as a good spot to take profit on any moves to the upside.

So, if you just followed the analysis and commentary throughout the 24th you would have known three important things:

1. That the bias for the pair was to the upside as long as the current sentiment was in play

2. That the area between the 0.5850 and 0.5900 was a good spot to consider as a possible zone to re-engage the pair

3. That there was no catalyst for the pullback and that as long as the risk tone remained positive it was a valid trade to the upside.

Following that simple guidelines could have banked you just shy of 90 pips which is not bad for a simple day trade following daily sentiment.

Now, it’s important to realize that the focus of these trade examples are not to showcase a particular strategy, but rather to show you how our commentary and analysis can help you to interpret news and fundamental analysis and turn it into profitable trades.

So, if you’re interested in learning more about Forex Source and how our market commentary and analysis can help you, click the menu above and check out Forex Source.

Thank you and please remember to post your questions or comments below this video, we read and appreciate them and actually base our future videos on what you ask for.




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